Deadbeat Illinois: Local governments hurt by state delays

PEORIA — Continuing delays in state payments have forced local governments to do what they can to deal with the short-term shortfalls.

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Posted Jul. 8, 2013 at 12:01 AM
Updated Jul 8, 2013 at 7:23 AM

Posted Jul. 8, 2013 at 12:01 AM
Updated Jul 8, 2013 at 7:23 AM

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PEORIA — Continuing delays in state payments have forced local governments to do what they can to deal with the short-term shortfalls.

Often that becomes a game of hurry up and wait, moving money around from other funds to make up the difference.

“The county has adjusted its cash flow for operations based on the delayed timing of the state’s payments over the years,” Peoria County chief financial officer Eric Dubrowski said. “The county temporarily utilizes other revenue streams and its reserves to fund operations until various tax disbursements are received from the state of Illinois.”

Simply put, that means borrowing from Peter to pay Paul as area governments deal with their share of the $3.4 billion in bills awaiting payment from the comptroller’s office.

Like private-sector vendors, local bodies still have to come up with the cash to keep operating somehow. Cash can be shifted from reserves, but then that money isn’t earning interest.

Slower-growing reserves can have an effect on how taxpayer dollars get spent from year to year.

Peoria City Manager Patrick Urich has previously complained that the city itself faces losses “probably in the tens of thousands of dollars a year” because of shuffling the cash around to close those gaps — and that in a time of multimillion-dollar budget deficits.

Governments have gotten used to this over time, with some Peoria County officials saying they’ve been prepared for late payments for years. Among elected officials, who recognize that they’re still able to keep government functions running, the sympathy more often goes to private businesses that have to cut staff or take out loans to make up the same shortfalls.

“I don’t think the late payments affect us as much as they do the small businesses,” Tazewell County Board Chairman David Zimmerman said.

Not all delays are extraordinary either. Sales taxes are paid out on a delay simply based on the tax collection cycle, and governments plan for that. The real concern is with money from state income tax payments and corporate personal property replacement taxes. There, local bodies are seeing about a three-month delay, Dubrowski said.

But he and other officials hope that legislation introduced in Springfield to ensure more timely payment is passed to require faster distribution.

About this series

Reporters from GateHouse Illinois newsrooms examine the real-world effects of the state’s failure to pay its bills.